Don Giallanza 0:07
So Tony and I came over to CP Chem in 2017 had been working at Halliburton for 10 plus years. And Tony left and came over in March. And then I followed in May of 2017. Want to walk when we walked in the door, I think it was day two, where once I learned where the bathroom the coffee bar was, I need to make some changes. Everything was paper, we had a file room bigger than a doctor’s office. Not that it could ever happen. But you could lose a file if you were doing a Credit review. And it went from desk to desk to desk, right? That pie was $45 million. So the internal audit team wasn’t too happy about that. All the Credit reviews from history were in that file, right and you’d had gone to a certain desk and came up missing. I need something to to help keep us organized. We spent all our time doing dialing for dollars. It’s you know the exercise, you print the Excel spreadsheets, you highlight everything and then you go make your phone calls. What I didn’t know is from our collector standpoint, who they were calling who they were reaching out to. So what happened for us is moving to HighRadius, organized everything, it helped us become more efficient, I spend less time dialing for dollars and more time doing Credit reviews. And as they said, what that led us to is 2021 Zero bad debts globally. Because we’re spending more time watching out what’s in front of us than we are dialing for dollars. And for us, our next journey is turning on the automatic collection notices. Today, our team does that manually, but we’re gonna let HighRadius do that. So all we’re going to do is work the exceptions, again giving us more time to spend on the Credit aspect of it. Going to HighRadius, I think one of the biggest challenges, and Tony I’ll speak to that a little bit was we had a lot of cooks in the kitchen because it wasn’t just a US-based activity. We included Bella our Belgium office, Singapore, in Saudi Arabia. So we had to get everybody somewhat on the same page, right. There were particulars for each business that we had to take into account. And so about an eight, nine-month exercise to go live. We originally were going to go live in September of 19. we postpone that to November, just so we could get our feet underneath us, and actually worked out to be great timing. Because y’all know what happened in March of 2020, right? COVID COVID hit and everybody went home. And while our colleagues in the tax department and finance and accounting, were all dragging wagons with files, we just walked out with our laptops, you know, we were fine. We’re watching different industries, we had an onslaught of customers raising their hand asking for extended terms. And we’re able to look at those different industries understand which ones were struggling where we needed to make changes. And it’s helped us. Since that time, it’s just been a great help for us to weather the storms. And not be in a situation where we’re reactive, we were operating in a reactive mode, you know, prior to 2019. And now we’re proactive. Volumes have grown significantly. And so one of the main questions we get well, how many people did you let go, I didn’t get HighRadius to let people go HighRadius is to help our team do better, be more efficient, and fake stop running the reports I want you to your work is going to show up in those reports because all our numbers are going to get better. Now from a collection standpoint, our collection efficiencies and our DSO. We’re up there industry best. That wasn’t what this was about. This was all about the Credit aspect of it and moving our time spent from dialing from dollars to get over to that Credit review and getting those Credit reviews done in a timely manner. Our internal audit department visits us every year to make sure we’re within policy. We’re doing what we need to do the last two years absolutely clean. And we’re just getting suggestions. You might want to do this. You might want to do that but zero audit exceptions whereas previously because we’re on paper, there was more opportunity for corrections. Today what HighRadius has helped us achieve through attrition, people moving from our departments to other departments. You know, our last three hires. We’ve changed the skill set. We’ve changed the people in our organization who are interested to come to the Credit department. Our last three hires are MBA CPIs. That’s is not typical for them, they want to come over and have to do, you know, dial for dollars and things of that nature. But we don’t do that much of it anymore, right? HighRadius is taking that. So they’re going to visit customers, they’re traveling with the sales team.
Don Giallanza 5:15
When we lose, folks, it’s, I got a laundry list of folks that are raising their hand to come be in our department. So it’s really been a game changer. I’m not spending time training people on HighRadius because it’s, it’s more or less like Outlook, right? It’s pretty easy to teach us itself. What I’m teaching people are is here’s your portfolio, you handle, here’s what the expectation is, I’ve got the sales group coming in, and they’re part of our interview panel. So they can pick the Credit team, which has really, you know, Credit and sales were supposed to be like this, right? I don’t have it, I get the invites, where it can Tony go on this trip? Can Tony go on that trip? Go, go go be with him, right? Because there’s no replacement, you know, he send out 42 emails, but that five minute conversation goes a long way, looking your customer in the eyes and knowing who they are. And if they’re going to pay you goes a long way, right? So I might not be able to get off 25,000 Or get past a $2 million Credit review. But now that I met the folks and I saw their operation, there’s no better time but to go sit down with your customer and hear their story. How did this happen? How did you guys get here? Right? They love to tell that story. And you learn a lot about him, you learn a lot about you learned whether you know at the end of the day, ability and willingness to pay, right? Well, you learn a lot about their willingness to pay when you’re sitting in front of them. And it’s allowed our team to get out there and do that a lot more. go to conferences, learn what other companies are doing. I love to come here and hear how everybody’s using HighRadius and how can we do better? What can we do different? We turned on Cash App in February. So constantly listening to those stories and how people we turned it on in February we’re doing about 40%, we’re low, upper 70s, low 80s. Now my challenge is how do I get to 1995 My boss wants to get to 100. So that’s fine. Not gonna happen. I’ll tell him that right now. Right, I can’t do it. But 9095 I can get there. I just don’t know how I’m gonna get there yet. So hearing stories from other companies and doing what we think is best, but just in conversation out here, somebody, you know, can can give us an idea that maybe we’re not thinking of, and I can utilize that. And, you know, that was as we were looking at an SAP homegrown system. Another group and then HighRadius and what does attract is too HighRadius was this community. And, and, and the vast power users that you have out there, and listening to their story and their successes. And, you know, when we’re going through this exercise they got I raised it got great salespeople, right, but I’m gonna go talk to my colleagues in my industry, I’m gonna go talk to folks that are using the tool. Tell me the real story. Right? How does it work? How do you use it? Is it everything they’re telling me it is. And I think we’re using the tool to its fullest. But there’s always that opportunity to push it a little bit more. We have regular sessions with our team. We included them as we were going through the process. You know, we invited everybody come in and sit down and you test the system, use the system. So by the time we turned it on, everybody in our team was a power user. But the whole idea was that was to get the folks that were negative and didn’t want change, to be a part of that change to embrace that change and understand sitting about cutting people. This is about us being more efficient. And how do we get there, I can’t get there. If Tony opts not to use it. I’m not using it to its fullest. And you know, I’ll go back to my treasurer and CFO and ask for more toys. We’re not going to spend any money for you, because you’re not using the toy we gave you. Now I can go back and you know, plead that I want this module and that module and you know, it’s it’s helped us be a lot more efficient. For us, it was a big deal to hit the zero bad debt. The problem with that is it becomes the expectation for 2022. Yeah, no. So there’s a lot of work that goes into that. And there’s a lot of luck that goes into that too. Right. So, you know, can you get that back to back years, we’re going to try and that’s our focus.
Antonio Cardenas 09:34
Some of the features of the tool that kind of helped us gain some of those efficiencies as Don touched on right. The majority of our people’s day, for the most part on a day-to-day basis, was 90%, dialing for dollars 10% Credit and collect Credit mitigation, Credit reviews, right. And that kind of pigeon hold us into hiring a certain kind of person who’s very hard to get somebody That was interested in coming in and doing other things besides dialing for dollars, right. So being able to automate a lot of those processes, right? Being able to send out collection notices to all of our customer bases and certain aging bug buckets at the click of a button, made it that much more easier to get through the collections early in the morning, and then concentrate the rest of the day on-again, collaborating with the Salesforce, working on Credit reviews, ensuring that we were in tune with what was going on not only in our industry but in the world and what kind of impact it had on our customers and our customers a better use to pay right 2020 was a very tough year for most people. We did have a couple of bad bad debts in 2020. But for the most part, we were able to navigate that pretty successfully, right? Some of the some of the losses that we did take in 2020 were kind of calculated losses, necessary evils as we like to label them in our group and in 2021. Right, we continue to have success. And as Don touched on, for the first time in company history globally, zero bad debts, right? Some of the things that we want to touch on, right, so on the Credit side, we transitioned over from a paper application to an online Credit application, right. One of the benefits of that is that was a very painful, painful process, it was communicating with the salespeople. Salespeople thinking once we got that email for the Credit application, that was the end of their job, US reviewing the application, realizing that we were missing key information, the customer didn’t sign the Credit application, they forgot to include certain aspects of the Credit app that were important to us. So transitioning that over to an online Credit application, we set up those required fields. So anytime we receive a Credit application into the workflow, that application is complete, and it has all the necessary information we require to make our Credit assessment not only that, right, it further automates it so as soon as they hit the submit button, the system sends out email correspondence to both trade and bank references. So when that hits my workflow for the most part, when I reviewed in a day or two, I have a full review. We have a space for the customers to upload their financial statements. Some of them do others don’t depending on whether they require an NDA or not. But we’ve had customers successfully submit their financial statements to the system without us even requesting them just having that space there for them to do it. They just go ahead and submit it which is great for us. And then having those complete trade references and back bank references attached, clearly right stated and capturing the system with the information we require. It’s allowed us to really reduce the amount of onboarding from sometimes up to two weeks to less than a week, right anywhere from three to five days. For the most part, we’ve got a customer on boarded turned on with Credit and doing business with them. So that’s been huge, right integrating with Credit risk monitor on our publicly traded companies, what used to be a pretty painful process going through our different Credit sources, pulling down financial information, then taking that financial information, keying it into our Excel spreadsheet to make our Credit analysis. Now at the click of a button Search a publicly-traded company, that information is downloaded available, and I’m able to make a decision, craft a recommendation and submit a pretty sizable Credit review to our CFO or treasurer just in a matter of an hour or so depending on the complexity of the account. So that part of it has been great. And the approval process right. Like Don said, we were paper file we were wet-signature company prior to HighRadius. So I would do my review printed out, sign it, take it to the next approver he would sign it and that that process alone could take days just to make sure that person was in office available had time to review it. Now as soon as I click the Approve button at my level, if it’s within my DOA, that thing is finally approved, sent over to SAP information is uploaded, no fat fingering a million dollar Credit limit into a $10 million or $100 million Credit limit to was, which has happened prior to HighRadius. So that was one of the controls that we missed on and were noted in quite a bit of audits. So yeah, if it’s within my DOA, I click Approve, that’s updated and I forget about it until the next review date. If it’s above my review, now our treasurer, CFO which were difficult signatures to obtain, they get an email, they can review it wherever they are through their phone, pull up the PDF file of the review. Now the reviews are in a consistent and concise format. They’re they know exactly where they need to go in the Credit review form which I think for the most part we may have over customized or overcomplicated it that so that’s part of the phase two that we’re looking at right streamlining that make it even easier for them to get to the information they need in a quick manner but they can go to through that PDF, find the info they’re looking at whether it’s liquidity, whether it’s tangible net worth, or whatever information It’s important to them. They’re in agreement with it click a button, it sends the email to HighRadius the system accepts the approval of it’s at the final DOA, it sends the information SAP and we’re done that’s wrapped up and complete, right? And then just the visibility to what our actual exposure is to some of these customers. I know Wesco touched on it, we are able to clearly see how much exposure we have out to these customers, our customers are segmented in a way that if we need to quickly provide our CFO, our treasurer, who are the top 20 customers in regards to exposure, given a current rating, right, we want to look at all our double B customers, which anything under-investment rated at CP Chem makes our management team very nervous, we’re a risk-averse company, we don’t take a ton of risk. So our upper management anytime we get Credit limits in the seven figures, they want to know all about the customer. They want to know who they are, what they’re about, and make sure that we are taking any risks that it’s a very calculated risk. So quick poll question, what is the biggest Credit challenge that you are facing in your organization currently. So I can tell you from the CP Chem perspective, it’s a through d or e all of the above. I mean, we literally had this was ox. Yeah, this was a, it looks like what we use in order to kind of sell our management on investing in HighRadius as a tool for Credit, right. And these were the items that we were looking to resolve as part of the HighRadius Credit and Collection initiative. I’ll let Don, kind of go through these even though we’ve kind of touched on it.
Don Giallanza 16:37
We kind of touched on these a little bit. We, you know, we didn’t have the central data point for our information. Credit arrays were difficult because you could sort it in Excel, you know, highest to lowest. Now today we have a worklist, it comes up and we’re able to go for those Credit views a lot quicker, a lot cleaner, our approval rate because we’re consistent. Our CFO or treasurer, if it goes up to them, they’re turning them around a lot quicker. Those folks are sometimes hard to reach, HighRadius allows us to ping them in the event that they’ve had it a day or two too long. To remind them, hey, can you look at this Credit review. They love the system from the standpoint it’s consistent. So whether they see a Credit review from Belgium, Asia or the US very similar format, whereas we didn’t have that before.
Antonio Cardenas 17:33
And I think key to also right prioritization, Don, kind of touched on it on the collection front and having that worklist when you come in in the morning, understanding which accounts are priority, which you have to collect on, likewise, on on the Credit module, you have that same prioritization, right. And you can customize that to whatever priority priorities are important to your company, whether that’s by dollar size, whether that’s by risk profile, and that’s all available there and ready for your team to go in there and know exactly what they have. So in addition to periodic reviews, right, any new Credit applications that our company receives, are they routed depending on what business line who the salesperson is to the correct Credit analyst for review, and that you can keep track of how long it takes your Credit analyst to turn around a Credit review. So like I said, we for the most part have reduced our onboarding time by 50%, from about two weeks, a week, and under depending on who the analyst is and how their day is going. But we’ve made some great improvements on that front.
Don Giallanza 18:34
Much more proactive as well, our sales folks will do monthly sales reports. And then that sales report talks about who they’re prospecting or who they think they might get as a new customer, we can go in there and do our Credit checks ahead of game ahead of time by just reading that report. And then we can go back to them and their report and said, Hey, we we saw these three companies are prospecting of these three, let this one go to competition. And these two right here, you can blow and go I don’t know what you’re thinking about. But we got a million dollars already approved for them. So we’re out of their way. So now all of a sudden, we’re walking with them and able to make friends a lot easier, because we’re taking a lot of headaches away from them. I gotta go the Credit group and ask for a Credit line, it’s going to take days, but now we’re in front of them, as long as they put it in their call report and they communicate that to us we can use that tool and be proactive for them and totally stay out of their way, which they appreciate.
Antonio Cardenas 19:23
One of the things don touched on it, of course for the first time in 2021, zero bad debt. One of the milestones, historic milestones the CP Chem that we had talked about was in 2021, literally one year after will not even the year after the year of go live. For the first time in company history. We were compliant with our Credit review policy as far as how often our Credit reviews needed to be completed. So we had a pretty lenient Credit policy and regards to smaller customers. So for what’s the Tick was like anything under 250 Right? It was at managers discretion. So, our Credit managers prior to Don, and I had a lot of discretion, some of these $250,000 Credit reviews hadn’t used. They were brought online, right. So that opened us up to quite a bit of risk, right? We became so efficient in the process that we literally reviewed every customer that we do business with on an annual basis, something that I could have told you would have been impossible with our prior processes. So that that was a huge, huge win. And I think that was the first eye opening thing that we saw, as far as how effective of a tool HighRadius has been in. And that was eye opening for management. Because as we went live in 2020, we, because of the reporting capabilities of the system, we were able to uncover over $100 million in open Credit lines that had not been reviewed any years, right. And these were Credit lines anywhere from 250, we had some that were $10 million. And these are open Credit lines that that customer’s risk profile could have changed along the way. And they didn’t have we didn’t have controls in place to stop it. So they call it in place an order that was within their Credit line, that thing was going to ship and they could have been bankrupt for all we know because we didn’t have the tools in place or the reporting in place to be able to mitigate that risk. So that again, that was another kind of eye opening milestone or a win for the HighRadius tool. Some of the gains that we’ve presented up to our management 50% percent reduction in time for onboarding customers, right. increase in risk class changes because as Don touched on, we were able to more frequently review our customers more in depth review our customers, we were able to actually correct and adjust some of our assessed risk for some of our customer base. So that was a huge win for us. And as I just touched on right 100% completion of all Credit reviews, regardless of Credit limit for the first time in company history. So that was something that was a huge, huge, huge skin on the wall for us. All right, I’m sure Don and Tony will be available. You know, they’ll be around for any more questions.